Fitch Revises Bank of Industry's Outlook to Stable; Affirms IDR at 'B'

(The following statement was released by the rating agency)
Fitch Ratings-London-02 October 2020:
Fitch Ratings has revised Nigeria-based Bank of Industry's (BOI) Outlook to
Stable from Negative, while affirming the bank's Long-Term Issuer Default
Rating (IDR) at 'B'. The Outlook change follows a similar rating actions taken
on Nigeria's sovereign on 30 September 2020 (see: 'Fitch Revises Nigeria's
Outlook to Stable, Affirms at 'B'" at www.fitchratings.com). A full list of
rating actions is provided below.
Key Rating Drivers
IDRs, SUPPORT RATING FLOOR AND NATIONAL RATING

The affirmation of BOI's 'B' Long- and Short-Term IDRs, 'B' Support Rating
Floor (SRF) and Support Rating of '4' reflects Fitch's view of potential
support the bank could receive from the Nigerian authorities in case of need.
The revision of the Outlook on BOI's Long-Term IDR to Stable mirrors the
Outlook on the sovereign.

Fitch has equalised BOI's Long-Term IDR and SRF with the Long-Term IDR of the
sovereign as it believes that the Nigerian authorities have a high propensity
to support BOI. Our assessment primarily reflects (i) the bank's important and
clearly defined policy role in funding economic growth in Nigeria; (ii) its
99.9% state ownership, split between the Ministry of Finance (94.8%) and the
Central Bank of Nigeria (CBN; 5.1%); and (iii) the entirety of the bank's
wholesale funding being either provided or guaranteed by the Nigerian state.
However, Fitch also views the ability of the authorities to support BOI as
limited as indicated by Nigeria's 'B' Long-Term IDR.

BOI is Nigeria's primary development bank, with the sole mandate of financing
the country's emerging industrial sector. The bank works closely with federal
and state governments, and Nigerian banks, to meet its developmental
objectives. BOI plays an important role in supporting important government
policies and in providing counter-cyclical loans since the onset of the
economic crisis resulting from the coronavirus pandemic.

BOI has successfully managed to diversify its resources in recent years. In
March 2020, the bank secured a EUR1 billion loan facility from a syndicate of
commercial banks and multilateral development banks, which is fully guaranteed
by the CBN. We expect that it will serve to expand BOI's lending to priority
sectors.

BOI maintains a solid capital base (end-1H20: equity-to-asset ratio of 24.4%),
which is prudent for the bank's exposure to the volatile operating
environment. Profitability is not a key objective; however, BOI continues to
generate reasonable returns on equity driven by healthy net interest margins
and, so far, moderate loan impairment charges.

The affirmation of BOI's Long-Term National Rating of 'AA+(nga)' reflects the
bank's unchanged creditworthiness relative to that of other credits in
Nigeria.

VIABILITY RATING

As is usual for development banks, Fitch does not assign a Viability Rating to
BOI. This is because its business model depends on state support and, in our
view, could not be carried out on a commercial basis.
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to positive rating
action/upgrade:

The most immediate upside rating sensitivity for BOI's IDRs and SRF is an
upgrade of Nigeria's sovereign ratings. An upgrade of BOI's Support Rating
would follow a multi-notch upgrade of Nigeria's sovereign rating.

BOI's National Ratings are sensitive to a positive change in Fitch's opinion
of its creditworthiness relative to that of domestic peers.

Factors that could, individually or collectively, lead to negative rating
action/downgrade:

The most immediate downside rating sensitivity for BOI's IDRs and SRF is a
downgrade of Nigeria's sovereign ratings.

BOI's ratings are also sensitive to a reduced propensity of the authorities to
support the bank. This could be indicated by a change in BOI's policy role,
such as a shift into commercial activities, or a material reduction in
government ownership. Our assessment is that this is unlikely in the
foreseeable future.

BOI's National Ratings are sensitive to a negative change in Fitch's opinion
of the bank's creditworthiness relative to that of domestic peers
Best/Worst Case Rating Scenario
International scale credit ratings of Financial Institutions and Covered Bond
issuers have a best-case rating upgrade scenario (defined as the 99th
percentile of rating transitions, measured in a positive direction) of three
notches over a three-year rating horizon; and a worst-case rating downgrade
scenario (defined as the 99th percentile of rating transitions, measured in a
negative direction) of four notches over three years. The complete span of
best- and worst-case scenario credit ratings for all rating categories ranges
from 'AAA' to 'D'. Best- and worst-case scenario credit ratings are based on
historical performance. For more information about the methodology used to
determine sector-specific best- and worst-case scenario credit ratings, visit
[https://www.fitchratings.com/site/re/10111579]
REFERENCES FOR SUBSTANTIALLY MATERIAL SOURCE CITED AS KEY DRIVER OF RATING The
principal sources of information used in the analysis are described in the
Applicable Criteria.
Public Ratings with Credit Linkage to other ratings
The ratings of BOI are equalised with the sovereign rating of Nigeria.
Bank of Industry Limited; Long Term Issuer Default Rating; Affirmed; B; Rating
Outlook Stable
; Short Term Issuer Default Rating; Affirmed; B
; National Long Term Rating; Affirmed; AA+(nga)
; National Short Term Rating; Affirmed; F1+(nga)
; Support Rating; Affirmed; 4
; Support Rating Floor; Affirmed; B

Contacts:
Primary Rating Analyst
Vincent Martin,
Director
+44 20 3530 1828
Fitch Ratings Ltd
30 North Colonnade, Canary Wharf
London E14 5GN

Secondary Rating Analyst
Kurt Boere,
Senior Analyst
+44 20 3530 2707

Committee Chairperson
Olga Ignatieva,
Senior Director
+7 495 956 6906

Media Relations: Louisa Williams, London, Tel: +44 20 3530 2452, Email:
louisa.williams@thefitchgroup.com

Additional information is available on www.fitchratings.com

Applicable Criteria
Bank Rating Criteria (pub. 28 Feb 2020) (including rating assumption
sensitivity) (https://www.fitchratings.com/site/re/10110041)
National Scale Rating Criteria (pub. 08 Jun 2020)
(https://www.fitchratings.com/site/re/10121358)

Additional Disclosures
Dodd-Frank Rating Information Disclosure Form
(https://www.fitchratings.com/site/dodd-frank-disclosure/10138157)
Solicitation Status
(https://www.fitchratings.com/site/pr/10138157#solicitation)
Endorsement Status
(https://www.fitchratings.com/site/pr/10138157#endorsement_status)
Endorsement Policy
(https://www.fitchratings.com/site/pr/10138157#endorsement-policy)

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